Cabinet of Ministers has granted approval for the government to reintroduce the Capital Gains Tax (CGT) scheme.

Announcing the cabinet decisions Wednesday (June 15), the government said during the last few decades there has been a massive increase in the private capital in the country.

According to the government, the increase in prices of land attributable to the large infrastructure developments carried out through government funds have enabled the land owners to make significant capital gains free of taxation. This resulted in the increase in the inequality of income distribution.

The Cabinet Committee on Economic Management therefore has agreed to reintroduce the Capital Gains Tax to rectify the situation.

The proposal made by Prime Minister Ranil Wickremesinghe as the Chairman of the Cabinet Committee on Economic Affairs to draft a new Capital Gains Tax Regime, was approved by the Cabinet of Ministers.